By David Brooks, Founder & President of Retire SMART
My dad once told me: “Son, when you’re in sales, never discuss religion or politics.”
That probably was sound advice, but I’m not wired that way. I would rather be transparent with people up front instead of ducking and dodging issues that might be a problem later.
I am glad to have conversations about politics, including with people who disagree with me. When former President Jimmy Carter died in December 2024, I said on the radio that I thought he was a great man and a terrible president. It’s possible for reasonable adults to debate political issues without having it become death-sport.
At Retire SMART, we are ready to serve anyone looking for help in planning a successful retirement. I have clients and employees who range from left to right to everywhere in between on the political spectrum. That’s one of the great things about America. When it comes to doing business and getting things done, we rise above our differences and find ways to cooperate and make all of our lives better.
If you are near or in retirement, you certainly should be having a conversation about politics with your financial advisor. The recent election is of paramount importance to you and your quality of life in retirement.
Elections have consequences. In a nation as divided as ours is politically, an election such as the last one that produces a dramatic change in leadership can have a similarly dramatic impact on economic indicators and financial markets. How do you navigate all the uncertainty that comes with such a momentous change of political leadership?
When it comes to financial planning, you need an advisor with laser focus on the policies promoted by the incoming leadership. Personalities and party intrigue make news, but what tax, spending, and regulatory policies are likely to be implemented? That is what will affect your retirement.
This is why we put so much time and effort into monitoring political developments. We do it because we need to prepare for whatever policies are coming next. We have dozens of approaches and strategies to address all manner of political developments, but we must be proactive; we must be ready to adjust quickly if that is what is required by a change of policy. That does not happen unless you have done the preliminary research and analysis so you are not caught by surprise by political developments.
People tend to focus on national politics, but we also watch, and encourage our clients to follow and engage in, state and local politics. Decisions made by your state legislators, county commissioners, city council members, and other local office holders can have a significant impact on your retirement, especially where taxes are concerned.
Do you struggle with property taxes? Your local school board most likely is generating more than half of that burden. Is your representative voting the way you want? Should you be that representative?
When it comes to managing your retirement, of course you are in charge, but we strongly recommend that you engage the help of a financial professional who is politically savvy. We have found that moving the right amount of money from the right account at the right time could save a client hundreds of thousands of dollars in taxes over the course of the client’s retirement. But you must have a sense of what is coming policy-wise at the local, state, and national levels to know when to make a move, and how much to move. Making the wrong move, or failing to make the right move at the right time, could be a costly mistake from which it may be difficult to recover. When you are near or in retirement, the margin for error is small because you don’t have a lot of time to restore losses.
At Retire SMART, we rely on numerous analytical tools, plus our team members’ combined decades of knowledge and experience, to evaluate what is coming down the pike politically and position our clients to their maximum advantage.
Fluctuation in politics and economics is a part of life in a free society. Don’t be anxious. Don’t guess. Don’t close your eyes and hope for the best.
Most of all, don’t take your eye off the ball. The ball is “policy.” Never mind the campaign slogans and ads. What is the school board or the state legislature or Congress actually going to do on taxes and other issues? That’s the key to building and maintaining a successful retirement plan.
Tell your advisor you want to sit down and get a comprehensive review of the expected policies coming in 2025, and their possible impact on tax rates, interest rates, market growth, and all the economic and financial variables that could affect your retirement. If you’re not getting the breadth and depth of analysis from your advisor that you deserve, demand it. Or visit with us at Retire SMART.
